BASIS OF WEALTH

Evening Post, Volume CXXVII, Issue 117, 20 May 1939, Page 10

BASIS OF WEALTH

NOT PAPER MONEY

PRODUCTION VOLUME

BORROWING TO SPEND

While he did not want to increase the Government's embarrassment at the present time, said the Leader of the Opposition (the Hon. Adam Hamilton) in an interview today, he felt compelled to reply to mis-statements made by the Prime Minister (the Rt. Hon. M. J. Savage). Now that the Government had used up all reserves it was going to borrow so that it would have money to spend, but its policy would continue to undermine the standard of living in New Zealand. The real foundation of the standard of living was production and not paper money. Production had declined, and money secured by borrowing would not prevent a decline in the country's wealth which came from exports. The Government had been leaning heavily on the people's savings but deposits in the Post Office had declined, and Mr. Savage now had to appeal to the "bloated capitalists" for a loan arid also to ask overseas bondholders for more money. The Government's policy had not only materially reduced the purchasing power of the New Zealand pound, but had also brought about a decline in production and so threatened a major disaster and a real reduction in the standard of living.

"Mr. Savage continues to make a j vitrue out of each successive necessity," said Mr. Hamilton. "Haying had a three years' practical education as : a Minister, Mr. Savage has ceased to ! talk about debt-free money. He, who once abhorred borrowing, now finds that in his modern 'Rake's Progress/ borrowing will serve his purpose just as well as real production. It is money to spend! But before Mr. Savage can spend, somebody else must, save. Mr. Nash warned the Labour Conference of the existence of that fundamental truth. "The present Government has spread the taxation net in directions hitherto undreamed of, not even boys and girls or domestic servants being exempt. All must be taxed, and now all must save, so that Mr, Savage may spend. "The Prime Minister now makes mysterious references to recommendations that he has received from some source in regard to retrenchment in public works. Mr. Savage knows best the details of the Departmental report that made tttose recommendations, and it is interesting that several Ministers of the Crown have made reference to the reduction of the number of men on public works, sometimes saying that these men should be transferred from the public works on ,to farms, and sometimes saying that they should be transferred from the public works into secondary industries. Mr. Savage cannot blame "Departmental advisers for referring to a reduction in public works when he knows quite well that many members of his own party are openly saying the same thing. DROP IN PRODUCTION. "But when Mr. Savage goes on to say recommendations of that sort point the way to the destruction of the foundation of industry, and further goes on to say, 'we want to build New Zealand up, maintaining for the people that standard of living which was brought to them when the Labour Government assumed office,' it is necessary to. remind him that the standard of living which New Zealanders, up to now have enjoyed, and which they enjoyed even before Mr. Savage arrived in New Zealand, has been based on the volume of production in our, foundation industries. A reference to the New Zealand Year Book will show that during the three years in which the present Government has been in i office, the volume of production in our primary industries has dropped to an alarming degree. If the Prime Minister Will take the trouble to make himself acquainted with the area under 'all crops,' he will find that for the year 1935-36 it was 2,090.745 acres, and in 1937-38 this had dropped to 1,785,329 acres. This decrease in primary production strikes at the very base of the standard of living of all New Zealanders. ■ "The standard of living in New Zealand is based on the amount of real production, and that heap of real production—a heap of real goods, and not paper money—shared amongst the people of New Zealand makes the standard of living. If the volume of production—the heap of goods^-de-clines, then inevitably there must be a decline in the standard of, living, and that decline in the standard of living will be brought about by the Government's policy, which really does 'point the way to the destruction of the foundation of industry.' The Government's policy is now undermining the standard of living. "The cost of living is pressing very severely on the family man. And all housewives know 'that a pound does not go anything like as far as it did even a year ago. Many civil servants know that they are worse off today than they were three years ago. Their salaries have only slightly increased, while their cost of living has soared. "Mr. Savage knows that the excess of our exports over our imports has declined in the following alarming manner:— Excess of exports. Year. £ 1936-37 12,612,000 1938-39 3,458,000 "This drop in the value of our exports is a reflex of the drop in the volume of production. It is this drop in our real production whicH Is: causing Mr. Nash real worry, and which has now taken him Home to deal with the tfade problems which the Government has created. POST OFFICE SAVINGS. "As the Government is in real difficulties with its over-expenditure, and as Mr. Savage has now seemed to change his policy in regard to the creation of credit, he proceeds to ask for a local loan. A few years ago Mr. Savage used to talk about the mobilisation of the public credit and actually got the support of some people in this country because he talked about debtfree money. Coming up against realities in public finance, Mr. Savage now finds that he and his policy , have strained the public credit to the utmost and now is forced to do' what -he so frequently condemned in others — he proposes to borrow £4,500,000. Recently Mr. Nash made his pathetic appeal to the Labour Party conference to call a halt in spending-and to start saving.

"The Minister of Finance has been leaning heavily on the Post Office Savings Bank to get money to finance his public works and other schemes, but the gfiures published this week show that the withdrawals of money from the Savings Bank this year exceed the amounts deposited by the sum of £4,015,817. In 1936-37 people put I about £4,000,000 more into the Post Office Savings Bank than they took out, but in the year 1938-39 people

have taken out-over £4,000,000 more than they have put in. This, perhaps, is the most striking commentary on the financial trend in New Zealand. And: everybody knows that the. Post Office, Savings Bank is not the bank of the 'big capitalists,' but is the bank of the mass of t the people.

"In their first three years of office, then, the Labour Government has dissipated all the large reserves it found in all Government Departments, and has caused the exhaustion of our London reserves. After three years of fairly gpod export prices and after a series of record taxation years, the Government finds itself financially bankrupt. It now appeals to the 'bloated capitalists' in New Zealand for a loan, and will shortly ask the 'oversea bondholders' for another loan.

"This is a wonderful record for a Government that was going to abolish 'the grip of the money power,' and for a Government of which the Prime Minister. once asserted: 'If we raise wages and decrease the .hours of labour, and then allow prices to go up in the same ratio, we will have altered nothing.'

"In fact, the Government's policy has not only materially reduced the purchasing power of the New Zealand pound, but is also developing a major disaster and causing a decline in production from our foundation industries, which threatens a. real reduction in the New Zealand standard of living."

Mr. C. R. Edmond, general manager of Todd Motors, Ltd., is leaving on May 23 for a business trip to England^ Canada, and U.S.A. While in England Mr. Edmond will visit the HumberHillman factory, and in Canada and U.S.A. the Chrysler factories. = He will be accompanied by Mrs. Edmond.